Oil Falls Below $80 On Mixed Data From China

Advertisements

The brief price rally triggered by OPEC+’s extension of production cuts until end-2023 has swiftly evaporated as a string of bad news from China turned overall sentiment back to bearish. Even though Chinese oil imports remain robust and October demonstrated another month-on-month increase to 11.53 million b/d, the prospects of quotas running out and weaker refinery margins have been the main driver of ICE Brent declining to $84 per barrel.

Saudi Arabia extended its voluntary production cut of 1 million b/d to the end of this year, with Russia chipping with its 300,000 b/d reduction to its exports, maintaining the existing voluntary restrictions in place, OilPrice.com reports.

Climate activist groups such as Follow This have been having a hard time pushing through climate-focused resolutions, receiving minuscule support with ExxonMobil and Chevron shareholders as BlackRock, Vanguard or JPMorgan all voted against them.

Venezuela’s state oil firm PDVSA is in talks with local and foreign oil services companies to restart idled equipment that remains in place across the country’s oil fields, with SLB (NYSE:SLB), Nabors Industries (NYSE:NBR) and Evertson reportedly having equipment that could be revived swiftly.

The government of the United Kingdom seeks to mandate yearly North Sea oil and gas licensing rounds after the COVID-triggered “temporary” pause in 2020 led to a hiatus lasting more than 2 years, hindering overall upstream activity and reserve replacement.

The US Department of Energy announced it would seek to buy up to 3 million barrels of crude for delivery in January 2024 to replenish depleted strategic petroleum stocks, to be delivered into the Big Hill storage site.

The total of short positions in WTI Nymex light sweet crude futures and options held by speculators more than tripled in the week ended 31 October to 95,999 contracts, with speculative short positions now at their highest since August.

Egypt, a country that traditionally exports LNG, has received a rare import cargo at its Ain Sukhna terminal in the Red Sea, as curbed Israeli supply led to lower feedgas flows and prolonged power outages across the North African country.

China’s state-owned oil major Sinopec (SHA:600028) signed a 27-year LNG supply deal with QatarEnergy, sourcing up to 3 million metric tonnes of LNG from the North Field expansion project in which the Chinese firm will hold a 5% interest.

Canada’s energy regulator CER ordered the Trans Mountain pipeline to stop work in a wetland area near Abbotsford, BC, having found several environmental non-compliances, marking another hold-up in the delay-plagued history of the project.

Iranian oil exports have declined for the second consecutive month to 1.4 million b/d, just as the US House of Representatives passed a bill (abbreviated as SHIP) that would sanction all foreign ports and refineries processing Iranian crude.

OPEC Secretary General Haitham al-Ghais hinted at OPEC making progress in talks on expanding its membership, saying Brazil could be interested in joining the organization of oil producers, similarly to Azerbaijan, Malaysia or Brunei.

US crude oil refiners are expected to average 90-91% in utilization rates in October-December, down from almost maximum capacity in Q2-Q3, as weak gasoline cracks and limited diesel production upside curb their appetite to fire on all cylinders.

Kuwait’s national oil company KPC reportedly needs $45.7 billion to plug the gap in missing revenues as it seeks to meet its 5-year spending plan, flagging that retaining annual dividends instead of transferring them to the state is “inevitable” until 2027.